12400 WEST MAGNOLIA BOULEVARDVALLEY VILLAGE

CA 91607

A BRAND NEW 10-YEAR ABSOLUTE NNN LEASE

16830 Ventura Blvd. Suite 100, Encino, CA 91436www.marcusmillichap.com

BRANDON MICHAELSSenior Managing Director InvestmentsSenior Director, National Retail GroupTel: (818) 212-2794bmichaels@marcusmillichap.comLicense: CA #01434685www.BrandonMichaelsGroup.com

I. EXECUTIVE SUMMARY

II. INVESTMENT HIGHLIGHTS

III. PROPERTY SUMMARY

IV. FINANCIALS

V. AREA OVERVIEW

TABLE OF CONTENTS

INVESTMENT ADVISOR

The Brandon Michaels Group of Marcus & Millichap has been selected to exclusively represent for sale 12400 and 12406 West Magnolia Boulevard, two single-family homes totaling 5,779 SF, currently used as a drug and alcohol recovery and treatment center. The current tenant Recovery Guild, has agreed to sign a brand new 10 year lease at the close of escrow at $32,000 a month, absolute NNN with 3% annual rental increases.

The subject property has operated as a recovery facility since 1975, which was originally created by a charitable organization to offer assistance and care to those in the movie and television industry. Today, Recovery Guild is a leading rehab facility in Los Angeles, offering high-end amenities and expert care. The buildings have been completely renovated and offer a pool and hot tub, individual rooms for patients, and a private chef.

The Recovery Guild offers a safe and secure income stream to potential investors. The leased is guaranteed by a personal guarantee from the operator with over $7,000,000 of net worth. The facility has 11 bedrooms and 12 beds, creating an exceptional environment in which almost every patient has their own room.

The Recovery Guild is well located near Studio City, with close proximity to the major studies of CBS, Universal, Warner Bros, and Disney. The walkable location offers various amenities in close proximity, versus similar facilities, which are located in single family residential neighborhoods that lack area amenities. The site benefits from its high-end, centralized San Fernando Valley location, and provides a safe and comfortable environment for its patients.

The Recovery Guild also creates a unique opportunity to acquire 15,386 SF of R3 zoned land in a prime San Fernando Valley Location. Under the current zoning, there are a number of potential development opportunities, including multi-family, condominiums, or senior-assisted living.

Executive Summary

A brand new 10 year absolute NNN lease with annual rental increases.

• Brand new 10-year absolute NNN lease, backed by a personal guarantee with a net worth of over $7,000,000

• Recovery Guild is a leading drug and alcohol rehab and treatment facility in Los Angeles offering high- end amenities and expert care

• Gross sales north of $5,400,000, offering a below market rent to sales ratio of 7%

• Low risk investment as a result of outstanding sales volume in an excellent San Fernando Valley location

• Recovery Guild generates high net profit margins north of 40%

• Revenue stream from private insurance

• Safe and stable cash flow stream with 3% annual rental increases

• This facility holds a Joint Commission Accreditation & Department of California License. Only 6% of treatment facilities hold a Joint Commission Accreditation

• Ideally located near major studios including Paramount, Universal, Warner Brothers, and Disney

• Highly walkable, commercial location within close proximity to various amenities versus most treatment facilities that are located in the middle of single family residential neighborhoods

• Immediate neighborhood and surrounding amenities creates a safe and enjoyable environment for patients

• Tree-lined, high-end neighborhood with no neighborhood issues or transient neighbors

• High-end facility which was completely renovated

• Amenities include an executive chef, swimming pool and hot tub, 11 bedrooms and 12 beds

• R3 zoned land offers a multitude of future development opportunities

• This location has successfully operated as a treatment facility since 1975

ADDRESS12400 & 12406 West Magnolia Boulevard, Valley Village, CA 91607

PRICE $5,485,000

PRICE/SF $914.17

CAP RATE 7.00%

BLDG SF 5,779 SF

LOT SF 15,386 SF

YEAR BUILT 1938

ZONING LAR3

APN 2356-019-023 | 026

TENANT Recovery Guild

LEASE START Close of Escrow

LEASE EXPIRATION 10 years

OPTIONS Two (2), Five (5) year options

RENT/MONTH $32,000 + NNN

RENT/MONTH/SF $5.33

NET OPERATING INCOME $384,000

INCREASES 3% annual

GUARANTEE Personal

NET WORTH $7 million

Property Information Investment Highlights

LEASE INFORMATION

PROPERTY INFORMATION

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Recovery Guild is a small, highly individualized treatment center with 11 rooms and 12 beds and offers a full range of care options including medicated assisted treatment, counseling, and long-term follow up.

BUILDINGS

TOTAL BLDG SF

12400 Magnolia: 3,037 SF12406 Magnolia: 2,742 SF

12400 Magnolia: 7,137 SF12406 Magnolia: 8,249 SF

Breakdown:

Breakdown:

TOTAL LAND SF

LEASE TERM

NET OPERATING INCOME

Property Overview

12400 and 12406 West Magnolia Boulevard, Valley Village, CA 91607

22

5,779 SF

15,386 SF

10 years

$384,000

About the Tenant

• Drug Rehabilitation• Alcohol Rehabilitation• Medication Assisted Treatment• Counseling and Therapy• Emergency Rehabilitation• Southern California Rehab

SERVICES

Recovery Guild has expanded into two adjoining buildings and rebuilt into one of the most alluring and contemporary treatment centers in the world.

Recovery Guild offers a full range of care options including Medicated Assisted Treatment program, behavioral counseling, and long term follow-up.

Recovery Guild specializes in high-quality addiction rehabilitation in Southern California. They offer full service substance abuse disorder treatment programs with a variety of “tracks” in place to provide comprehensive and concentrated treatment.

Their treatment program is located near Studio City, and their facilities have just been remodeled. Residents get to enjoy new bedrooms with queen pillow-top heavenly beds, computer access with wi-fi capability, as well as newly remodeled bathrooms.

Recovery Guild is a small, highly individualized treatment center with only 12 beds. Each person gets highly focused attention and care. Recovery Guild also work closely with families to help insure better outcomes and to make sure that treatment continues to be successful after their loved one returns home.

RECOVERY GUILD

MAGNOLIA BOULEVARD

CHANDLER BOULEVARD

LAUREL CANYO

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WH

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WILKIN

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AVENU

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MARV’S DELI

12400 WEST MAGNOLIA BOULEVARDVALLEY VILLAGE

CA 91607

AVERAGE HOUSEHOLD NCOME WITHIN A 1 MILE RADIUS

AVERAGE HOUSEHOLD INCOME WITHIN A 5 MILE RADIUS

$87,267

$88,398

INCOME AND EXPENSE CURRENT

Scheduled Lease Income $384,000NNN Charges $123,463

Effective Gross Income $507,463

Expenses $123,463

Net Operating Income $384,000Loan Payment $237,802

Pre-Tax Cash Flow $146,198

Principal Reduction $77,366

Total Return Before Taxes $223,564

PROJECTED EXPENSES ANNUAL PER SF

Taxes: 1.25% $68,563 $11.43 Insurance $4,440 $0.74

Electricity $20,400 $3.40

Water $7,800 $1.30

Trash/Sewer $3,660 $0.61

Gas/Heating $6,000 $1.00

Internet $3,600 $0.60

TV $3,000 $0.50

Telephone $4,200 $0.70

Pool/Spa Services $1,800 $0.30

Total Expenses $123,463 $20.58

PROPOSED FINANCING

Loan $3,565,250 Terms 25 year amortization

Interest Rate 4.50%

PRICING

Sales Price $5,485,000CAP Rate 7.00%

Price/SF $914.17

Financials

ANNUALIZED OPERATING DATA PRICING

LEASE ABSTRACT

TENANT Recovery Guild

SF 6,000 SF

LEASE START C.O.E.

LEAS EXPIRE 10 years

OPTIONS Two (2), Five (5) years

RENT $32,000 + NNN

RENT/SF $5.33

NET OPERATING INCOME $384,000

INCREASES 3% annual

MAGNOLIA BOULEVARD

WILK

INSO

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INSURANCE PER CLIENT

SERVICE # DAYS # MONTHS # DAYS/MO $/DAY % COLLECT $ COLLECT/DAY $/STAY AVG/DAY

Detox 7 0.23 30 $4,500.00 35% $1,575.00 $11,025.00 $1,575.00

Residnetial Treatment (RTC) 23 0.77 30 $3,800.00 35% $1,330.00 $30,590.00 $1,330.00

Partial Hospitalization (PHP) 15 0.50 30 $2,800.00 35% $980.00 $14,700.00 $980.00

Total 45 1.47 $56,315.00 $1,251.44

MONTH 1 MONTH 2 MONTH 3 MONTH 4 MONTH 5 MONTH 6 MONTH 7 MONTH 8 MONTH 9 MONTH 10 MONTH 11 MONTH 12 TOTAL

Total No. of Rotated Clients 12 12 12 12 12 12 12 12 12 12 12 12 144

Avg Collectable Income per Day/Client $1,251.44 $1,251.44 $1,251.44 $1,251.44 $1,251.44 $1,251.44 $1,251.44 $1,251.44 $1,251.44 $1,251.44 $1,251.44 $1,251.44 $15,017.33

Avg Collectable Income per Day * Number of Clients $15,017.33 $15,017.33 $15,017.33 $15,017.33 $15,017.33 $15,017.33 $15,017.33 $15,017.33 $15,017.33 $15,017.33 $15,017.33 $15,017.33 $180,208.00

Total Clients Income per Month (Avg Days) 30 $450,520.00 $450,520.00 $450,520.00 $450,520.00 $450,520.00 $450,520.00 $450,520.00 $450,520.00 $450,520.00 $450,520.00 $450,520.00 $450,520.00 $5,406,240.00

Insurance Clients

Collected Amount - Previous Billing Cycle $450,520.00 $450,520.00 $450,520.00 $450,520.00 $450,520.00 $450,520.00 $450,520.00 $450,520.00 $450,520.00 $450,520.00 $450,520.00 $450,520.00 $5,406,240.00

Insurance Collected Total $450,520.00 $450,520.00 $450,520.00 $450,520.00 $450,520.00 $450,520.00 $450,520.00 $450,520.00 $450,520.00 $450,520.00 $450,520.00 $450,520.00 $5,406,240.00

RECOVERY GUILD’S 12 MONTH OPERATING BUDGET

Annual Operating Data

North Hollywood is a mix of hip enclaves and residential neighborhoods, home to celebrities, studio executives, and families.

Area Overview

DEMOGRAPHICS 1 Mile 3 Miles 5 Miles

2014 Population 36,168 286,421 599,053

2014 Households 17,079 118,514 227,456

2014 Average Household Size 2.11 2.40 2.61

2014 Daytime Population 9,624 87,253 253,716

2014 Owner Occupied Housing Units 34.18% 33.23% 40.10%

2014 Renter Occupied Housing Units 65.82% 66.77% 59.90%

2014 Vacant 2.41% 1.99% 2.26%

BREAKDOWN OF HOUSEHOLD INCOME

$ 0 - $14,999 11.5% 12.6% 12.0%

$ 15,000 - $24,999 10.7% 11.6% 11.2%

$ 25,000 - $34,999 8.7% 10.8% 10.6%

$ 35,000 - $49,999 13.5% 13.8% 13.3%

$ 50,000 - $74,999 19.8% 17.6% 17.2%

$ 75,000 - $99,999 11.7% 11.1% 11.1%

$100,000 - $124,999 7.7% 7.3% 7.8%

$125,000 - $149,999 3.9% 4.2% 4.5%

$150,000 - $199,999 5.2% 4.5% 4.7%

$200,000 - $249,999 2.7% 2.3% 2.6%

$250,000 + 4.5% 4.3% 5.1%

AVERAGE HOUSEHOLD INCOME

2014 Median Household Income $56,244 $51,604 $53,748

2014 Per Capita Income $41,362 $34,449 $33,707

2014 Average Household Income $87,267 $82,950 $88,398

Recovery Guild is within a 10-20 minute drive to the headquarters of entertainment and media companies like Warner Brothers, Disney, CBS, NBCUniversal, Dream Works, and ABC.

Recovery Guild is within minutes of the NoHo Arts District. It is one of Southern California’s popular cultural destinations for artists and creatives. The district features over 30 professional theares, art gallerys, art displays and professional dance studios.

Nearby Studio City contains a host of lifestyle amenities from public parks such as Fryman canyon Park, farmer’s market, to diverse restaurants on Ventura Boulevard. Universal Studios Hollywood, one of Los Angeles’s most visited destination, Universal Studio Hollywood, is nearby as well.

Formerly known as Laurelwood, Studio City is located on the north slope of the Santa Monica Mountains. It was part of the Rancho Ex-Mission San Fernando, a Mexican land grant, and named after the area’s studio lot, opened by Mack Sennett in 1927. That studio is now known as CBS Studio Center. Studio City is a conveniently located and popular Valley neighborhood just North of The Hollywood Hills and the Canyon. It is a low density area with a high income/education population demographic. Many celebrities live in Studio City, and several studios are located there. It is considered historic for Los Angeles with many of the homes being built at the earlier part of the 20th century. As a community that was born out of the entertainment industry, Studio City is regarded as the “Jewel of the Valley,” attracting actors, musicians, and writers and serving as a hub of the San Fernando Valley and a gateway to the Westside and Hollywood. Studio City is also convenient to major tourist attractions, Universal Studios and Universal City Walk, as well as convenient to Hollywood.

STUDIO CITY

VALLEY VILLAGE

NORTH HOLLYWOOD

Area Overview

The 2.09-square-mile Valley Village lies north of Studio City, east of Sherman Oaks, and south and west of North Hollywood. According to the Los Angeles Times, a new community, Valley Village, was formed in May 1939. Plans were laid for launching community beautification by 500 women in June 1939 at a meeting on the grounds of the King Charney Rancho on Magnolia Boulevard. At that time the plan called for a model community featuring parkways, cycling paths, a series of small parks, recreation centers and other amenities. Approximately 22,000 residents live within the boundaries of Valley Village.

North Hollywood has experienced a dramatic transformation over the past decade with a steady migration of higher-income residents attracted to the area’s urban amenities, improved schools, and convenient location near key employment and entertainment centers. North Hollywood has also become a regional mass transit hub with the opening of the North Hollywood Metro Station in 2000 providing Red and Orange Lines service. The Red Line provides traffic free travel to Universal City in four minutes, Hollywood & Highland is eight minutes away, Wilshire & Vermont in Koreatown is 19 minutes, and Union Station in Downtown Los Angeles is 29 minutes away. The Orange Line takes riders from North Hollywood to cities throughout the West San Fernando Valley.

Area Overview

UNIVERSAL STUDIOS HOLLYWOODUniversal Studios Hollywood is a film studio and theme park in the Universal City community of the San Fernando Valley region of the city of Los Angeles, California, United States. It is one of the oldest and most famous Hollywood film studios still in use. Its official marketing headline is “The Entertainment Capital of LA”. It was initially created to offer tours of the real Universal Studios sets and is the first of many full-fledged Universal Studios Theme Parks located across the world. Woody Woodpecker is the mascot for Universal Studios Hollywood.

UNIVERSAL CITY WALKUniversal CityWalk Hollywood is a three-block entertainment, dining and shopping promenade. Universal City Walk provides more than 30 places to eat, 3 nightclubs, 19 screen theater with state of the art IMAX® and more than 30 unique shops. 5 Towers on Universal CityWalk is a state-of-the-art concert venue. CityWalk is located directly next to Universal Studios Hollywood.

CBS STUDIO CENTERCBS Studio Center is a full service facility with 18 sound stages on 40 acres. The lot has many exterior locations as well, including 3 permanent sets; New York Street, Central Park, and Residential Street. There are 18 office buildings and 20 bungalows comprising approximately 210,000 square feet of production office space. In addition over 200 permanent and portable dressing rooms; there are hair & makeup rooms, green rooms, and 9 multi-purpose rooms.

WARNER BROTHERS STUDIOGuests will explore our outdoor sets and soundstages used to create productions such as Gilmore Girls, The Big Bang Theory and Argo. Each tour includes exclusive access to original props, costumes, picture cars, and sets used from Batman to Friends. Additionally, studio tour guest will stop at the DC Universe: The Exhibit, the real Central Perk set, original Batmobiles, and so much more. Visit the best studio tour in Los Angeles and interact with all the magic of film making today! We get you closer to the entertainment you love.

Area Overview

POINTS OF INTEREST

Warner Brothers Studio Walt Disney Co. Nestle USA NBC Universal Kaiser Permanente Providence Health & Services Yahoo

PROXIMATE TO: Downtown Los Angeles Tri-Cities (Burbank/Glendale/

Pasadena) Hollywood San Fernando Valley North Hollywood Burbank

POINTS OF INTEREST Fryman Canyon Coldwater Canyon Park CBS Studio City Universal Studios Universal City Walk

NEARBY RETAIL Sherman Oaks Galleria Ventura Boulevard Westfield Fashion Square Universal City Walk Studio City Farmers Market Studio City Plaza

Universal City Walk Hollywood Bowl Universal Studios Fryman’s Canyon

MAJOR EMPLOYERS

SAN FERNANDO VALLEYAlmost 2.5 million people reside in the San Fernando Valley, which includes the submarkets of Northridge-Northwest San Fernando Valley, Van Nuys-Northeast San Fernando Valley, Woodland Hills, Burbank-Glendale-Pasadena and Sherman Oaks-North Hollywood-Encino. The area’s population is expected to increase by 1.9 percent through 2020, or by 47,400 new residents.

Known for its entertainment industry, the Valley boasts more than 100 soundstages. Entertainment giants calling the Valley home include Walt Disney Co., Universal Studios, Warner Brothers, DreamWorks and Paramount Ranch. The entertainment industry continues to set the area’s economic pulse. Local motion-picture and entertainment companies employ roughly 25,000 people.

While the Valley has grown into the world’s center for entertainment, aerospace giants Boeing and Northrop Grumman and 21st Century Insurance also generate numerous well-paying jobs. Healthcare is also a major source of employment with providers that include Kaiser Permanente and Providence Health & Services. As a result of its large concentration of high-salaries and successful companies, the area’s median household income of$61,600 per year has risen dramatically in recent years.

Although the median home prices dipped during the recession, affordability remains a challenge for much of the local population. High home prices keep the homeownership rate at 50 percent in the San Fernando Valley and provide a large rental base.

SAN FERNANDO VALLEY MAJOR EMPLOYERS

Area Overview

Services 47%

Retail Trade 17%

Manufacturing 9%

Finance, Insurance & Real Estate 8%

Wholesale Trade 5%

Public Administration 5%

Transportation, Communications 5%

Construction 5%

SFV SHARE OF TOTAL EMPLOYMENT

SAN FERNANDO VALLEY HIGHLIGHTS

� About 2.5 million residents in the San Fernando Valley

� Population growth projected of 45,000 new residents by 2019 in the San Fernando Valley

� Strong ties to the entertainment industry – Home of Walt Disney Company, Universal Studios, Warner Brothers, DreamWorks and Paramount Ranch

� Local motion picture and entertainment companies employ roughly 25,000 people

� Aerospace (Boeing & Northrop Grumman) Insurance (21st Century Insurance) and Healthcare (Kaiser Permanente and Providence Health & Services) industries also generate numerous well-paying jobs

� Substantial income growth since 2000

� Home ownership rate is near 50% and large rental base

SAN

TA BARBA

RA 80 miles

LOS A

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ELES 16 miles

LAS VEG

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iles

SAN

DIEG

O 135 m

ilesSA

CRAM

ENTO

370 miles

PALM

SPRING

S 124 Miles

DISTANCE TO:

Area Overview

G R O U P

BRANDON MICHAELS

BRANDON MICHAELSSenior Managing Director InvestmentsSenior Director, National Retail GroupTel: (818) 212-2794bmichaels@marcusmillichap.comLicense: CA #01434685www.BrandonMichaelsGroup.com